I have a citibank credit card in India.
I am a credit card user for the past ten years in three countries, including India. I will tell you the mixed responses and try to steer through the maze called
credit card.
First, Decide why you want a credit card. Could be three reasons (a) To borrow (b) Convenience and (c) Save money.
You decide which is the predominent benefit for you.
If it is (a) to borrow, Don’t take a credit card. Banks are falling over themselves to extend you personal loans. Take it and you are better off.
It it is (b) Convenience, You already have a ATM card - (you have it, isn’t it?) which you use on all shops as a credit card. Only difference is You should have money in the account to use it. This convenience may be enough for you. Because, this is free. Credit card costs money (Rs.750 per year for citibank. You can ofcourse, wait for a promotion in which first year fee is waived!). So, additional convenience is Rs.750 per year.
The main convenience of Credit card is having the extra money. If you credit card limit is Rs.1 lakh (Citi bank’s limit for the first year), then You have Rs.1 lakh EXTRA emergency limit with you. This is what you are paying for Rs.750 per annum. To that extent, You can reduce the bank balance surplus cash and put it in a short term cash fund in a mutualfund. That will earn you interest.
So, Decide whether you want convenience. If you ask me (You are, because you are reading it!), Always get one credit card because that has convenience and purchase security.
Third reason for a credit card is (c) Saving. In this Citibank is far ahead. You can choose a ’branded car’, like INDIANOIL CITIBANK card, Which allows free fuel and gives you points and enables you to save. Go through the various benefits of each card, Estimate how much you will save and decide whether you will save enough to offset Rs.750 per annum. This saving is with the convenience factor also, So that is an additional benefit.
For example, I have INDIAN OIL card. I save 2% service charge everytime I fill up. Also, I get turbo points. I will gather approx. Rs.500 - Rs.1000 worth of extra fuel on my annual purchase. That is about equalling my card. And, net effect, I get my card free.
Remember, Always that Credit card is a leash. Because, that gives you purchase security.
I will elaborate on this in my second chapter.
Also, I will explain how almost ALL companies in India are violating credit card rule. How Credit card companies do not give you any protection against loss of card or fraud, unlike foreign countries. Pl stay with me...
Thanks for your patience. Please give me your comments.
For specific queries, Pl write your comments. I will reply.